When is it the Right Time to Bring in CFO Services?

Learn about the qualities of the right financial leader and the signs that your business needs a greater level of expertise in the area.

If you are like most small to medium businesses, financial responsibilities fall on several different shoulders in the organization. As you look to grow, sell, or navigate a financially disruptive period, financial decisions carry increasing levels of complexity and risk that require additional expertise, either interim or part-time, to effectively meet business goals.

The finance department’s visibility into all other business functions make it the hub of most organizations. Without expert financial leadership, you run the risk of falling short of important goals, as well as risking the financial health of the business and wealth for owners.

Signs That You Need Greater Expertise

Often, it is not one factor that triggers the need to bring on a higher level of financial expertise but a combination of them:

  • When your volume or revenue is increasing or flat, but your profits are not.
  • When your ability to raise capital is critical to the future of the business.
  • When you are embarking on a merger or acquisition and need guidance to avoid pitfalls and risks.
  • When business goals change financial requirements that are less familiar to you (e.g. international expansion, new sales channel cost implications, new operating procedure requirements).
  • When you lack expertise to evaluate and implement different business models needed to successfully meet intended goals.
  • When the bank starts asking new questions before you are out of compliance with your loan covenants.
  • When your budget misses the mark or your forecasted cash doesn’t match the bank account.

Qualities of “The Right” Financial Leader

When seeking financial leadership, the right experience and seasoning will often make the difference between an acceptable relationship and a highly productive relationship.

From our experience, the most effective engagements happen when the business has identified a clear criteria for success when going through the process of selecting the right financial leader, including:

  1. Can they hit the ground running? Often when you realize you need support, you needed it yesterday.
  2. Are they a fit for your business? Ensure they have the capacity to adapt and thrive in your culture and have a passion for your product.
  3. Are they Analytic Experts? Ensure they can break down your company to its driving components and input these components into models to measure success and forecast the future.
  4. Can they manage the complexities of your business? Make sure you are confident in their experience to guide you through achieving your particular goals.
  5. Can they bring team building skills? Often, the CFO needs to bring disparate groups together inside and outside the organization to make decisions.
  6. What is their experience with boards and governance? An important value they bring is the ability to help shepherd decision making with critical stakeholders.
  7. Do they have the ability to build relations with banks & other financiers? An important driver of value is the ability to lead important negotiations with outside lenders as well as managing contracts.
  8. Are you confident in their execution acumen? Look for examples of experience in developing and implementing a strategic plan throughout an organization.
  9. Do you require process/systems improvement or business transformation expertise? The strongest candidates have extensive experience in setting up systems and processes to drive meaningful change that betters the company.
  10. Do they have the negotiating skills to deal with vendors? Expertise in negotiating high level transactions with suppliers, for capital and mergers and acquisition fills an often- overlooked organization gap.
  11. Do they know how to build cash dashboards, pro formas, and board decks? The ability to effectively take on these time-consuming tasks will significantly improve your productivity.

Business owners are often much more empowered when they partner with a financial leader who knows how to drive the business financially, can anticipate and solve problems, and can manage administrative, financial, and back-office tasks to allow you to focus on growing your business.

By The RVR Team

RVR has helped numerous clients in the past with the selection of the right financial leader. Please contact us if you are interested in discussing further.